“Entitlement Reform” and Health Care Spending

To hear most conservatives, Democrats are resisting “entitlement reform” as part of a fiscal “fix” for some combination of three reasons: (1) they fear the wrath of “the left” or “the base,” their counterpart to the folks on the Right that will go crazy if tax rates go up; (2) they are mired in the policies of the past, having for too long relied on expanded entitlement spending as bait for voters; and (3) they ultimately hope to make entitlements even larger as part of a plan to transform America into a European-style socialist state.

Interestingly enough, most of these assessments ignore what liberals are actually saying about the “entitlement reforms” conservatives keep proposing, at least with respect to the big targets of Medicare, Medicaid, and now Obamacare: they would move in exactly the wrong direction from steps needed to hold down the long-term costs of these programs, aside from the terrible effect they would have on beneficiaries. TNR”s Jon Cohen sums it up:

Contrary to what conservatives say and even many centrists seem to believe, the high cost of Medicare and Medicaid isn’t a by-product of government inefficiency. On the contrary, Medicare historically has held down costs as well as, if not better than, private insurance on a per capita basis. That’s thanks, in part, to the administrative advantages of a centralized government program and Medicare’s enormous power to set prices. Medicaid is cheaper still, to the point where, honestly, it’s underfunded. The programs keep getting more expensive, relative to inflation, because medical care keeps getting more expensive—and, in the case of Medicare, because of the increase in the number of people coming on the program. That’s due to a variety of factors: paying too much for services and to the people who provide them; delivering a lot of treatments that are unnecessary, unhelpful, or even harmful; focusing too much on acute treatment when we should be focusing on preventative care and other ways of keeping people healthy.

You don’t solve the problems Jon is talking about by privatizing Medicare and Medicaid delivery systems, or exposing beneficiaries or the states to higher costs, much less by dumping beneficiaries from the programs altogether. And you sure don’t solve them by disabling or reducing the scope of Obamacare, which introduces precisely the kind of reforms that might in the long run hold down health care costs.

Now it’s not surprising that most conservatives dismiss the legitimacy or efficacy of Obamacare’s reforms; it goes hand in hand with their refusal to accept CBO estimates that the reform initiative will reduce federal budget deficits. But that refusal is an act of ideological conviction, not “realism,” much less “courage.” Even if you consider liberal faith in the ability of the public sector to hold down costs irrational, it has a far better track record than the corresponding conservative faith in private health insurers, “personal responsibility” (i.e., higher costs for health care consumers), competition, and state government “efficiency.”

So let’s don’t accept the MSM assumption that Democrats are fighting what they secretly know to be the “right thing” on “entitlement reform,” and/or are just being childishly irresponsible in resisting benefit cuts, privatization or devolution. Yes, there may be some “reform” measures liberals are opposed to on grounds other than their combined ineffectiveness and cruelty; it’s never been entirely clear to me why Democrats so reflexively oppose greater means-testing for Medicare and Social Security (both are already means-tested in some respects). But there is an alternative path to “entitlement reform” progressives have been promoting all along, and it involves use of more, not less, public-sector leverage.